Swiss watchmaker TAG Heuer could soon join the upper-echelon of LVMH Moet Hennessy Louis Vuitton SE (LVMHF) brands that generate over $1 billion in annual revenue for the conglomerate’s business.
TAG Heuer is a Swiss luxury watchmaker known for its high-quality timepieces and rich heritage in the world of horology. The company was founded in 1860 by Edouard Heuer in St-Imier, Switzerland. Initially, it was named "Heuer," but in 1985, TAG (Techniques d'Avant Garde), a Luxembourg-based holding company, acquired a majority stake in the company and it was renamed TAG Heuer. In 1999, French luxury goods conglomerate LVMH bought nearly 100 percent of the company.
Building luxury brands into billion-dollar juggernauts is how LVMH was transformed into Europe’s most valuable company, worth around $500 billion.
Frédéric Arnault, CEO of TAG Heuer and third youngest son of LVMH founder, Bernard Arnault, adopted his father’s playbook for bringing luxury to the masses. The strategy requires TAG Heuer to offer its limited edition Carrera Plasma for over $500,000 alongside entry-level timepieces like its $1,450 Formula One model.
Another layer of Frédéric’s strategy involves exercising strict control over stores. Since taking over at the helm of TAG Heuer in 2020, the 28-year-old CEO has slashed the watchmaker’s points of sale from 4,000 to around 2,500. Then, he increased the number of boutiques that exclusively sell TAG Heuer and worked to elevate the brand’s positioning with higher-priced new models.
He has also bet on smartwatches, which make up about 15% of sales. Morgan Stanley (MS) estimates that TAG Heuer’s revenue rose 7% last year to $811 million.
China is a crucial area of focus for Frédéric. The country accounts for less than 10% of the watchmaker’s sales, but the company aims to open five stores in China annually.
On the date of publication, Andy Mukolo did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
